The productivity fallacy promoted by the media

Most of us were shocked late last year by the news that several would-be workers had actually run themselves to death in their desperation to be short-listed for new traffic police posts.  Yet this tragedy, from Pietermaritzburg, is precisely the outcome of the logic advocated by the Adcorp economist, Loane Sharp. 

Alas, this is not a sick joke. 

If there is any merit to the space once again given to blaming greedy workers for South Africa's mass unemployment, it is that Sharp's latest article make plain that he is deadly serious (‘Productivity measures misused to benefit unions' Business Report 17 July). 

Sharp's argument couldn't be clearer:  workers must work harder for the pay rises they seek.  His measure of harder work - productivity - is equally clear:  they must work quicker and/or longer and, crucially, they must somehow do so while still using existing means or methods of production.  Marikana has brought the harsh working conditions on the mines to public attention. 

In the world Sharp wants, rock drillers, using the same equipment, would have to work even harder to increase their output by the same percentage increase they seek in their pay.  Sharp allows for no inherent physical limits to this quicker work; somehow, the rock drillers must overcome the limits of their bodies and physiology in order to work quicker. 

He also allows for no time limits to the working day; the rock drillers must just work for as long as it takes.  He doesn't say this means working themselves to death but this is the logic of his argument.  And this logic already plays no small part in the scandalous death rate on South African mines, as workers chase bonuses. 

The Cape farm workers provide another example that is still fresh in the public consciousness.  They recently forced the government to agree a wage increase of some 52% (even though that still leaves them in a state of dire poverty).  Mr Sharp doesn't say how these workers are physically supposed to work 52% quicker, quite apart from having to do so in the heat of mid-summer.  All he does instead is (implicitly) to blame their alleged greed for the very unemployment that made them accept the unconscionable pay of R69 a day in the first place.

Worse still, he expects them to achieve this huge increase in productivity without the farm owners providing any enhanced equipment!  He argues that, if any such new machinery is provided by ‘capital' (the owners), then any productivity gains achieved by this equipment properly belongs to the capitalist.  In his universe, such is the power of capital that it magically makes machinery without the intervention of any human labour. 

Tractors, a symbol of mechanised agriculture, are evidently not made by workers but, somehow, just emerge readymade as a capital intensive cost to the farm owners.  These owners alone are therefore entitled to reap the profits of the increased productivity of ‘their' tractors.   Indeed, Sharp sees capital, itself, as something to which workers have contributed nothing.  Like the tractors, capital seemingly has no non-capital origins.  His universe, after all, is one in which capital is sharply separated from labour. 

His understanding of productivity is so absurd that it is dismissed even by mainstream economic theory.  The standard theory allows for productivity to have increased if the same number of workers increase their output using the means and methods provided for them.  Academic economists have tried in vain (not to reason with Mr Sharp for that would indeed by in vain) but to suggest to editors that his views do not merit the constant space he enjoys.  Why then does he remain the media darling? 

There is an unequivocal answer:  He provides what passes for the ‘scientific' justification for cheap labour and, by extension, the ‘economics' with which to attack trade unions.  In this respect, he is part of a long tradition.  There have always been some economists ready to defend practices that, in the course of time, end up being condemned as part of the barbarity of previous ages. 

Take Nassau Senior, for instance.  He was the first Professor of Political-Economy at Oxford University and the Chair of Britain's Poor Law Inquiry Commission of 1832/34.  This hired prize fighter of the cotton mill owners led the attack on the proposed legislation, of 1837, reducing the maximum working day for children younger than 18 years of age to 12 hours, rather than the then normal range of 13 to 16 hours. 

He used complicated arguments about fixed and variable capital to ‘prove' that the mill owner's entire profit came in the last hour of the long work day!  The reduction to 12 hours would thus destroy the entire cotton industry, the then backbone of Britain's industrialisation, for it would be an industry robbed of its entire profit. 

Yes, today, we probably shake our heads in disbelieve but 176 years ago this was the very stuff of economic science!

If history repeats itself first as tragedy then as farce, let us avoid extending this aphorism to farce descending into Loane Sharp!

Dr. Jeff Rudin is Research Associate, Alternative Information & Development Centre (AIDC).

An edited version of this article first appeared in Business Report.

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